The role of bank governance in managing the risks associated with banking institutions

Abstract

This study explores the crucial role of bank governance in maintaining financial system stability by managing risks within banks. It differentiates from prior research by not solely focusing on the 2008 financial crisis. Data from a survey of 220 bank employees were analyzed using structural equation modeling. Key findings include the necessity of well-informed boards and robust governance structures that adhere to regulations for effective risk management. Open communication with stakeholders and stringent control over technological risks are also vital due to the banking sector's increased technology reliance. These insights underscore the complexities of risk management in banking governance, stressing the need for a comprehensive, adaptable strategy. This research contributes new evidence to the importance of strong governance in risk management, with significant implications for bank and corporate governance fields. The study's model demonstrates high predictive accuracy and explanatory power.